g&s engineering

Just a quick post to inform the shareholders of what to expect with the recent acquisition of G&S Engineering.

As many would already be aware, the mining indusrty here in Queensland is going through a rather rough period with many mines closing and most importantly (For G&S Engineering) the scaling back of asset maintenance.

G&S's core business is based around the maintenance of dragline and Shovels and it really had most of the market cornered, as it had a 3yr BMA contract and also the Anglo Alliance maintenance contract. With the above mentioned slow down the BMA maintenance contract is now not producing any income as the previously scheduled shutdowns have been canned, so that BMA may reduce its overheads and as a result, two major shutowns which were scheduled at BMA Norwich park have been canned, with the next likely shutdown commencing in April 2013.

As you could well understand this has had, and will continue to have a significant impact on the core business and it's earning capity, as it now only has a few shutdowns in the Anglo Alliance and a construction project at Caval Ridge to maintain cash flow.

As with all companies, their foundation is their workforce, and it is with great regret that I say that G&S is now reaching a critical point, as their skilled workforce is now forced to seek alternative employment. For me, the reduce earning capicity is not of a signicant corcern as the market will undoubtedly correct itself over time. However, attracting skilled, experinced personnel back to G&S Engineering will be the challenge, as I am sure that many other companies which have been affected by the skills shortage are now rubbing their hands with glee.

Good luck to all holders.